THE METROPOLITAN WATER DISTRICT, PETITIONER, VS. THE PUBLIC SERVICE COMMISSION AND LA ASOCIACION DE EMPLEADOS CIVILES DE FILIPINAS, INC., RESPONDENTS.

This
proceeding to review an order of the Public Service Commission presents
for decision the two questions suggested by the following assignment of
errors, namely:

“1. The Public Service
Commission erred in ordering the suspension of the annual charges being
made by the Metropolitan Water District against its concessioners for
the maintenance and upkeep of their meters and service pipe lines;

“2. The Public Service Commission erred in declaring as unjust the flat
rate of P2 being collected on all delinquent bills, and in ordering the
Metropolitan Water District to adopt and collect instead a certain
percentage of the delinquent amount.”

It appears from the record that the Asociacion de Empleados Civiles de Filipinas, Incorporada,
filed with the Public Service Commission a complaint against the
Metropolitan Water District, alleging that the rates charged by the
same were excessive and unreasonable, and praying that these rates be
reduced. Other associations, such as the Manila Medical Society, the
Union de Consumidores, and certain residents of San Juan del Monte
joined in the petition. At the conclusion of the hearing, the Public
Service Commission handed down a decision which declared that the
finances of the Metropolitan Water District did not justify the
reduction of its rates, but as provisos found that the water district
should cease collecting charges for service maintenance, and that the
recharge collected after the last day of payment of the quarterly bill
should be based on a certain percentage of the amount of the bill and
should not be a fixed sum regardless of the amount of the bill. This
was on September 14, 1932, and subsequently, under date of October 20,
1932, the Public Service Commission issued an order of enforcement.
From this last order the Metropolitan Water District has taken an
appeal, and although the Solicitor-General insinuates that it is
unnecessary to review the evidence on which the decision was based by
the commission, it is evident that “any order” made by the commission
is reviewable by the Supreme Court, and that in this instance the order
brings up with it the decision and the evidence to which it relates. We
prefer to predicate our conclusions on the merits of the case.

The Metropolitan Water District, created by Act No. 2832 of the
Philippine Legislature, is a public utility, and as such is subject to
the jurisdiction of the Public Service Commission. On the other hand,
the district board of the Metropolitan Water District has power to
prescribe uniform rates for the maintenance and upkeep of the meters
and connecting pipe lines belonging to consumers of the water supplied
by said water district. In the decision of this court in the case which
resulted in these holdings (Metropolitan Water District vs.
Public Utility Commission [1924], 46 Phil., 412), it was said that “as
regards the inspection and ordinary repair of meters and pipe lines, it
was we think clearly within the power of the district board to fix a
system of rates, such as that specified in the resolution.” The
aforementioned decision and the language just quoted are significant,
and indicate clearly the respective functions of the Metropolitan Water
District and the Public Service Commission. We should proceed along the
same road.

In accordance with the corporate power
above-mentioned, the Metropolitan Water District has by resolution
provided for annual charges for the maintenance and upkeep of meters
and service pipe lines. The question is if the Public Service
Commission acted within the confines of its legitimate authority in
ordering the suspension of these charges.

Reasonable rates
for public utilities are the ultimate object. The extent of judicial
interference is protection against unreasonable rates. The public
utility is entitled to a just compensation and a fair return upon the
value of its property while it is being used by the public.
(Francisco’s Public Service Commission Act Annotated, pp. 48-57.) With
these basic principles to the forefront, we note that the Metropolitan
Water District spends annually between P52,000 and P57,000 for the
maintenance and upkeep of meters and pipe lines. The total income
derived from this particular kind of service is insufficient and shows
a loss of approximately P4,000 annually. Should the Metropolitan Water
District be required to cease collecting the maintenance charges, there
would be an annual loss of P50,000. However, the net annual profit of
the water district is about P140,000 which would still leave a balance
of about P90,000 in favor of the water district. But on a total
investment of over P22,000,000, an annual net profit of P140,000 or
about 7/11 of 1 per cent is not an excessive return within the meaning
of the law. This is particularly true when it is recalled that the
Metropolitan Water District is allied to the Government, and that the
net profits secured are all invested for the benefit of the water
consumers and not to satisfy private ends.

In further
explanation of the second question submitted, it should be stated that
during the pendency of the case before the Public Service Commission,
the Board of Directors of the Metropolitan Water District voluntarily
reduced the recharge from P2 to P1 so that at present a flat rate of P1
is being collected on all delinquent bills irrespective of the amount
due on each bill. The purpose of this charge, as indicated by
regulations of the water district is to cover expenses incidental to
the additional services rendered due to non-payment on time, such as
extra office work, and so forth. In a way, of course, it serves as a
penalty on the delinquent water consumers. We do not think that the use
of this flat rate by the water district is unjust and unreasonable.

We are as deeply concerned as were the original complainants in seeing
that water service is furnished the public at the lowest possible
figure. At the same time, the Public Service Commission should show the
Metropolitan Water District the same consideration which this court
endeavors to show the Public Service Commission. The Metropolitan Water
District has power to charge for service maintenance and for
delinquency in payment. The Metropolitan Water District likewise was
entitled to compensation for its services and to a fair return on its
investment. Having in mind therefore the doctrines previously announced
in the case of Metropolitan Water District vs. Public Utility Commission, supra,
a similar result must be reached, and we have to conclude that there
was no evidence before the Public Service Commission reasonably
supporting the finding that the charges being collected by the
Metropolitan Water District were unreasonable. Wherefore, the order
brought here on review will be set aside, without special pronouncement
as to costs in this instance.

Villa-Real, Abad Santos, Hull, and Imperial, JJ., concur.